Find the net-present-value analysis of the school board's two main alternatives: (a) continue to use the full-size buses on regular routes or (b) purchase the minibuses. Should the minibuses be purchased?

Full-size buses Vs Small buses:

Incremental costs:

Salary to bus driver (3$18,000)= -$54,000

Incremental revenue:

Savings in maintenance cost= $90,000

Net savings= $36,000

X Annuity factor at 12% for 5 years= 3.605

Present value of net savings= $129,780

Redesigning cost of route=-$15,250

Cost of mini buses=-$216,000

Present value of savings if full-size buses retained= $90,125

Net present value=-$11,345

 

How was the net present value obtained in excel?

Answer rating: 100% (QA)

Answer To calculate the net present value NPV of the school boards alternatives using Excel you can ... View the full answer